Brexit Blues

The​ ‘Overton window’ is a term from political science meaning the acceptable range of political thought in a culture at a given moment. It was the creation of Joseph Overton, a think-tank intellectual based in Michigan, who died in 2003 at 43 after a solo plane accident. His crucial insight, one which both emerged from and was central to the work of the think tank Right, was that the window of acceptability can be moved. An idea can start far outside the political mainstream – flat taxes, abolish the IRS, more guns in schools, building a beautiful wall and making Mexico pay – but once it has been stated and argued for, framed and restated, it becomes thinkable. It crosses over from the fringe of right-wing think-tankery to journalistic fellow-travellers; then it crosses over to the fringe of electoral politics; then it becomes a thing people start seriously advocating as a possible policy. The window has moved, and rough beasts come slouching through it to be born.

British politics has never seen a purer example of the Overton window than the referendum on membership of the EU. In 1994, the billionaire James Goldsmith founded a political party whose sole purpose was to advocate a referendum. The Referendum Party was a long, long way outside the political mainstream, and a significant number of its members were openly mad. The party’s one moment of – ‘success’ is the wrong word – mainstream attention came when Goldsmith himself stood in the 1997 general election in Putney against David Mellor, the cabinet minister who had been caught having an affair with an actress. Her fuck-and-tell story ran in the tabloids and included the fictional detail that (to quote the front page of the Sun) ‘Mellor Made Love in Chelsea Strip’. In a better-ordered society, making up things like that wins you the Prix Goncourt. Goldsmith did poorly, coming fourth with 1518 votes, but Mellor lost anyway. At the declaration of the result, Goldsmith and his supporters chanted ‘Out! Out! Out!’ while Mellor was making his concession speech, the words sounding a lot like ‘Raus! Raus! Raus!’ and providing one of the 1997 election’s most memorably ugly moments. The Referendum Party contested 547 seats and lost all of them.

The story of how that idea, self-evidently ridiculous in 1997, came to be a reality in 2016 is going to be often retold as we live through its consequences over the next few decades. One of the characteristics of the story is a distinctly British unseriousness: tragedy and farce, as so often in this country’s political life, were hard to tell apart. The climax was the referendum itself, which was promised in 2013 at a point when David Cameron was sure he wouldn’t have to deliver. The evidence strongly suggested he’d be able to do the same thing in 2015 as he’d done in 2010: blame his Lib Dem coalition partners for negotiating away manifesto commitments. When the campaign came, its main protagonist, Boris Johnson, was a man known not to be in favour of his own arguments, manoeuvring for position in the Tory leadership battle due to come at some point between a Remain victory and the 2020 general election. I don’t think there’s ever been a time in British politics when so many people in public life spent so much time loudly declaring things they knew not to be true.

Kipling asked a good question: ‘What do they know of England who only England know?’ But there’s a variation which, today, might be more relevant: ‘What do they know of the UK who only London know?’ The answer to both questions turns out to be the same: ‘Not nearly enough.’ England is so small, geographically, that it is easy to forget that it is also surprisingly big. There is no rich country of equivalent size that is more densely populated. The only country which has both more people than England and more people per square kilometre is Bangladesh. What this means, experientially, is that there is a kind of denseness to England and to Englishness; England is both very similar to itself and significantly different when you move ten miles down the road. When my family lived in Norfolk, I could have instantly picked the difference between a Suffolk and a Norfolk accent – I’d have been doing so unconsciously, without thinking about it: that person isn’t from round here. The Suffolk border was about fifteen miles away. I moved to London in early 1987 – when I got a job at the LRB, as it happens – and I don’t miss Norfolk, but I do often think of it.

In the years since, most of my travelling around the UK has been attached to various forms of media work. It would take a hard-working satirist to concoct a more metropolitan trade than being a restaurant critic, but the fact is I was one, twice, and a side effect is that I spent vastly more time travelling around England than I would otherwise have done; especially bits of England that I would, in the normal run of things, have had no reason to visit. If I weren’t swanking about promoting books and/or complaining about insufficiently caramelised scallops, I would never have had a reason to visit Hull or Wellingborough or Newcastle or Liverpool or Manchester or Leeds or Sheffield or Hexham or Budleigh Salterton or the Wirral or Chesterfield or Stowmarket or Brighton or Lancaster or Ludlow or Stamford. I’m very glad I did, because it was a big part of my education. The main things I took away from it are as follows: that England is both a small country and a big one; that there is a lot of Deep England out there and that the various forms of Deep England feel very different from one another – Ludlow is as English as G.K. Chesterton, and so is Newmarket, and so is Chesterfield, and so is Redruth, but they aren’t at all the same place.

I once asked Danny Dorling why, when I was at school, geography was about the shapes of rivers, but now all the best-known geographers seem to be Marxists. He said it’s because when you look at a map and see that the people on one side of some line are rich and healthy and long-lived and the people on the other side are poor and sick and die young, you start to wonder why, and that turns you towards deep-causal explanations, which then lead in the direction of Marxism. Travelling around England, I’ve often had cause to remember that remark. We’re used to political analysis based on class, not least because Britain’s political system is arranged around two political parties whose fundamental orientations are around class. What strikes you if you travel to different parts of the country, though, is that the primary reality of modern Britain is not so much class as geography. Geography is destiny. And for much of the country, not a happy destiny.

To be born in many places in Britain is to suffer an irreversible lifelong defeat – a truncation of opportunity, of education, of access to power, of life expectancy. The people who grow up in these places come from a cultural background which equipped them for reasonably well-paid manual labour, un- and semi- and skilled. Children left school as soon as they could and went to work in the same industries that had employed their parents. The academically able kids used to go to grammar school and be educated into the middle class. All that has now gone, the jobs and the grammar schools, and the vista instead is a landscape where there is often work – there are pockets of unemployment, but in general there’s no shortage of jobs and the labour force participation rate is the highest it has ever been, a full 15 points higher than in the US – but it’s unsatisfying, insecure and low-paid. This new work doesn’t do what the old work did: it doesn’t offer a sense of identity or community or self-worth. The word ‘precarious’ has as its underlying sense ‘depending on the favour of another person’. Somebody can take away the things you have whenever they feel like it. The precariat, as the new class is called, might not know the etymology, but it doesn’t need to: the reality is all too familiar.

What, over the last few decades, has been the political ‘offer’ to these people? In truth, nothing much. The reality of the modern British economy is that the thriving sectors raise the taxes which pay for the rest. The old work has gone and is not coming back. The decline in UK manufacturing is real but the headline figure – it used to be 25 per cent of our economy and is now 10 per cent – conceals the fact that we are still a significant manufacturing economy. Our proportion of manufacturing is more or less the same as in the US and France; we are the eighth biggest manufacturing economy in the world. Some of the decline is relative, since the services part of the economy has grown faster. But these jobs aren’t quite the same as they used to be. UK manufacturing is now a high-skill, high-value industry; we don’t make cars and fridges and washing machines and phones and things that everybody notices, but we do make high-technology components and industrial devices of a sort that nobody ever thinks about. The UK, for instance, has the second biggest aerospace industry in the world. The most complicated bit of a plane is the wing; the world’s biggest passenger aircraft wing belongs to the Airbus 380, which is made in Wales. (They’re so big that they travel from the Dee estuary in North Wales to Pauillac on the Gironde estuary on a specially built roll-on roll-off ship.) This industrial work is high-skill, high-value, and doesn’t provide mass employment; it’s a lot like the kind of service work which thrives in London and the South-East.

These jobs are dependent on the UK being a liberal, open, internationalised economy with high skill levels in particular areas. That has been the direction of travel in UK politics and economics since 1979, and both parties have pursued policies with that goal in mind. The Labour government offered more social protection but did so largely by stealth and without explaining and arguing for its actions. There was no strategy to replace the lost industry; that was left to the free market. With these policies, parts of the country have simply been left behind. The white working class is correct to feel abandoned: it has been. No political party has anything to offer it except varying levels of benefits. The people in the rich parts of the country pay the taxes which support the poor parts. If I had to pick a single fact which has played no role in political discourse but which sums up the current position of the UK, it would be that most people in the UK receive more from the state, in direct cash transfers and in benefits such as health and education, than they contribute to it. The numbers are eerily similar to the referendum outcome: 48 per cent net contributors, 52 per cent net recipients. It’s a system bitterly resented both by the beneficiaries and by the suppliers of the largesse.*

One of the things you notice, travelling around the country talking to people about economics, is that young people in particular feel they are living in an economic system rather than a political one. They think about jobs and paying the rent and whether they will ever own a home and, increasingly, about student debt, and they don’t see politics as having anything to say to them about those issues. That’s because the economics are the same irrespective of which political party is in charge. This is one of the reasons the Remain campaign failed to win the argument. Making economic arguments to voters who feel oppressed by economics is risky: they’re quite likely to tell you to go fuck yourself. That in effect is what the electorate did to the almost comic cavalcade of sages and bigshots who took the trouble to explain that Brexit would be ruinous folly: Obama, Lagarde, Carney, the IMF, the OECD, the ECB, and every commentator and pundit you can think of. The counter-argument wasn’t really an argument but a very clever appeal to emotion, to the idea that the UK could ‘Take back control’.

Whoever came up with that slogan had spent more time listening than talking. The Remain campaign failed to do that. The dominant note out there in the country since the credit crunch and Great Recession has been one of bafflement, of bewilderment and disorientation. How did this happen? How did we get here? Why does nobody listen to us, why does nobody care about us? It’s the thing you keep hearing when you engage with an audience on this subject. Although people talk about anger, it’s revealing that they often do so by asking why people aren’t more angry. If I had to pick one sentence I’ve heard more than any other in the last six years of conversation about economics, it would be ‘Why aren’t people more angry?’ The Brexit vote showed that plenty of them are. But perhaps it expressed that other feeling, the one of bewilderment, just as much. ‘Take back control’ is a cynical but extremely astute pitch to an electorate in that state of mind.

Immigration, the issue on which Leave campaigned most effectively and most cynically, is the subject on which this bewilderment is most apparent. There are obviously strong elements of racism and xenophobia in anti-immigrant sentiment. All racists who voted, voted Leave. But there are plenty of people who aren’t so much hostile to immigrants as baffled by them. They feel left behind, abandoned, poor, ignored and struggling; so how come immigrants want to come here, and do so well when they get here? If Britain is broken, which is what many Leave voters think, why is it so attractive? How can so many people succeed where they are failing? A revealing, and sad, piece in the Economist in 2014 described Tilbury, forty minutes from London, where the white working class look on resentfully as immigrants get up early and get the train to jobs in the capital which, to them, seems impossibly distant. ‘Most residents of the town, one of England’s poorest places, are as likely to commute to the capital as fly to the moon.’

The evidence on immigration is clear: EU immigrants are net contributors to the UK’s finances, and are less likely to claim benefits than the native British. The average immigrant is younger, better educated and healthier than the average British citizen. In other words, for every immigrant we let in, the country is richer, more able to pay for its health, education and welfare needs, and less dependent on benefits. They are exactly the demographic the UK needs. As for the much touted Australian ‘points system’, we have nothing to learn from it: immigrants to the UK are better educated and more skilled than immigrants to Australia. In addition, most of the people who appear as immigrants in the migration statistics are students, because the Home Office chooses to count students who come for the duration of degree courses as migrants. Of the 330,000 net arrivals in the latest numbers, 169,000 are students. Do you consider students to be migrants? Personally, I don’t.† These facts, freely available to anyone who takes an interest in the subject, had no traction in the referendum debate. That’s partly to do with Remain’s incompetence, but perhaps it also reflects the fact that the reality of young, healthy, aspirational, hard-working, thriving immigrants wouldn’t have helped the Remain case: it touches on too many sore points about being left behind.

One of the most important ideas to emerge from micro-economics – or at least, the one with the most consequences for democratic politics – is ‘loss aversion’. People hate to have things taken away from them. But whole swathes of the UK have spent the last decades feeling that things are being taken away from them: their jobs, their sense that they are heard, their understanding of how the world works and their place in it. The gaps in our society have just grown too big. I wrote in the last sentences of How to Speak Money that the existing structural tensions in Western society were so great that things could not go on as they were.

That’s​ not to say that I saw this coming in 2014. I thought the crisis in British (and indeed Western) society would be economic before it was political. It may yet turn out that way. For now, though, what has happened amounts to a collapse of our political system. The fact that the leadership of both main parties has disintegrated would under normal circumstances be a big story, but in the current chaos it is no more than a side effect. The deeper problem is that the referendum has exposed splits in society which aren’t mapped by the political parties as they are currently constituted. People talk about Britain being ‘divided’ as if that’s a new issue, but societies are often divided, and the interests of all groups and individuals do not align. If they did, humanity would be the Borg. Political parties are the mechanism through which divisions in society are argued over and competing interests asserted.

The trouble with where we are now is that the configuration of the parties doesn’t match the issues which need to be resolved. To simplify, the Tories are a coalition of nationalists, who voted out, and business interests, who voted in; Labour is a coalition of urban liberals, who voted in, and the working class, who voted out. This means that if a general election were held tomorrow on the single issue of the referendum, the voter wouldn’t know whom to vote for. It wouldn’t be at all clear which faction in either party was likely to prevail when the hugely important details of what Brexit means come to be debated.

This problem was compounded, or even created, by the nature of the Leave campaign. Leave’s arguments were based on lies. The first of these was that Britain ‘sends’ £350 million a week to the EU. This is a straightforward, knowing falsehood, and the fact that so many prominent Brexiters started rowing backwards on it the day after the vote is a sign that they knew it all along. The campaign’s second big lie was that the UK would be able to have access to the single market without accepting the free movement of people from the EU. No country has this arrangement, and there is no reason to think it is possible. If Britain were to secure a deal whereby it had access to the single market and control over EU immigration, it would be the end of the EU – because other countries would leave the EU and demand the same. Leave campaigners don’t seem to understand that Continental elites feel just as strongly about the continued existence of the EU as the Leavers feel about Brexit. For the EU to survive, it will be important for the UK to be seen to pay a high price for leaving. We don’t know what that price is going to be, and I don’t look forward to finding out.

It’s been widely remarked that the geographical and class-based nature of the UK’s divisions means that many people live in communities where they don’t know anyone who voted for the other side in the referendum. For me, that’s largely true: Lambeth, where I live, was the most pro-Remain place in the UK, and every neighbour I’ve spoken to was aghast at the outcome. I do know some Leavers, though, mainly people who work in finance. Their arguments for voting Leave are a mixture of abstract concerns about sovereignty (with which it’s easy to sympathise), deep apprehension about the economic risks for the Eurozone (ditto), and worries about regulatory crackdowns on the City of London (not so much). What all these Brexiters have in common is a belief that not much will change after the vote. The UK will have the same arrangement as Norway: we will make cash payments to the EU and accept free movement of people in return for access to the single market. That sounds fine to me; it sounds like the least bad outcome given where we are. The problem, however, is that it isn’t what most Leavers voted for. They were promised that they/we would ‘Take back control’, in a campaign whose principal focus was immigration. A stitch-up over immigration and access to the single market would be by far the best option for the UK, but it would also be a betrayal of these Leave voters.

The mendacity​ of the Leave campaign may represent a recalibration of our system along American lines, where voters only listen to people whom they already believe, and there are in effect no penalties for falsehood, especially not on the political right. The second toxic legacy of the campaign concerns the shamelessly xenophobic nature of the Leave message. There were good reasons why British public life had strong taboos around the subject of immigration. It is true that this caused resentment about the fact that it became impossible to voice concerns about immigration without being accused of racism. Forbidden topics generate powerful feelings. The taboo also stopped people making arguments in favour of immigration, and cut off the debate before it could properly begin. The economic arguments in favour of immigration, in rich Western countries with low birthrates, are pretty straightforward: since the next generation of taxpayers aren’t being born, we’re going to have to import them, if we want to keep our healthcare systems, pensions and welfare states. The Office for Budget Responsibility puts the necessary level of long-term immigration at 140,000 a year. But while the benefits of immigration are generally shared, the local impacts can sometimes seem overwhelming, especially when an area with no previous experience of immigration suddenly finds itself with thousands or tens of thousands of new arrivals, and no corresponding increase in resources to help with the pressure on housing, schools, healthcare and the rest. Governments have been far too slow to respond to this tension between long-term collective good and short-term local costs. The plan sometimes seems to involve waiting for the next census in ten years’ time and then having a think about it. (One simple but surely effective technique would be to monitor local surges in the languages used for Google searches.) But that’s no plan at all, and this is an area where government in the UK, as well as politics in the UK, has comprehensively failed, both to make the arguments about the realities of immigration and to make plans to deal with it.

It may now be too late to repair the debate about immigration. The silence around the subject had negative consequences, but the breaking of the taboo is a long-term disaster. It immediately led to a spike in racist abuse. All those millions of our fellow citizens who have spent the last few decades privately muttering to themselves that Enoch had a point now feel empowered, entitled, free to speak their minds at last. There is a real darkness in this country, a xenophobic, racist sickness of heart that is closer to the surface today than it has been for decades. That is a direct result of the referendum campaign. The campaign’s dual legacy is the end of the idea that politics is based on rational argument, and a new permission to hate immigrants. In politics, these new realities are going to be much more important in the years ahead than the details of exactly which half-bright Tory is in charge. Not that it will seem that way to anyone in the Tory Party. Writing in the Guardian in the immediate aftermath of the referendum result, Rafael Behr quoted a Downing Street source describing what had happened as the fulfilment of a long-term plan on the part of the Tory right to destroy Cameron. Strange as it may seem to non-Tories, many Conservatives don’t really regard Cameron as one of them: he’s too metropolitan and socially liberal, and in person he is notoriously cold, which matters inside the parliamentary party. The media, the source said, ‘were obsessed with blue-on-blue and they weren’t even getting that right. It wasn’t really Dave v. Boris. It was a well-organised right-wing coup.’ Theresa May’s appointments to the cabinet give a lot of credence to that theory. It now looks as if the party’s right in effect borrowed Cameron to win an unlikely election victory that they could never have achieved themselves, and then had him deposed.

As for the economics of the post-Brexit world, the immediate chaos was both predictable and predicted. The longer-term picture is much harder to discern. It’s not all bad news: the weakened pound is a good thing, and the likely crash in London property was long overdue. It might even make property in the capital affordable for the young again, which would be a strong overall positive for our national life. The uncertainties around the immediate future are quite likely to make demand slow down so much that it triggers another recession. The primary victims of that will be the working-class voters who voted Leave; the recessionary shrinking of the tax take will target them too. The faltering economy will cause immigration to slow, which will further damage the economy.

Once the particularities of our post-Brexit arrangement have been established, we’ll know a lot more about where we are. A great deal of economic uncertainty will attach not so much to the issue of trade – since the advantages of the freest trade possible are clear to all parties – as to the status of the City of London. Nobody outside the City loves the City, but the tax revenues raised by London’s global role in financial services are very important to the UK. At the moment, the City is the beneficiary of ‘passporting’, which allows it to deal freely in services across the EU. That passporting is likely, highly likely, to be the subject of an attack by the combined powers of Frankfurt and Paris (and English-speaking, low-business tax, well-educated Dublin too). Other anti-London regulatory moves can be expected. That could prove expensive for the UK.

A reduction in the dominance of finance might be a net positive; we would have a smaller GDP, probably, but the country wouldn’t be bent out of shape – or not to the same degree – by the supremacy of the City. There’s a lot to unpick here, though. For one thing, the anti-London moves might well have been coming anyway: one finance-world Brexiter of my acquaintance was in favour of Leave precisely because a narrow win for Remain (which is what he was expecting) would in his view have encouraged the regulatory bodies to gang up and crack down on London. There are likely to be all sorts of unintended consequences to exploit, and the City is full of people whose entire working lives revolve around exploiting unintended consequences. The biggest source of finance in the world is Eurodollars, the confusing name for dollars held on deposit outside the US. That entire market was an unintended consequence of US banking regulation in the 1960s and 1970s. The Eurobond (a bond denominated in a currency not native to the country where it is issued) was a huge new market created in the City in 1963, long before the Euro was even a glint in Frankfurt’s eye. The City is creative, opportunistic, experienced and amoral; if any entity has the right ‘skill-set’ to benefit from the post-Brexit world, it is the City of London.

In addition, nervous governments, desperate for revenue, are likely to bend even further backwards to give the City the policies it wants. An early sign of policy direction was George Osborne’s announcement that he wanted to cut corporation tax to 15 per cent to show that post-Brexit Britain is ‘open for business’. Osborne has gone; the policy probably hasn’t. The business press has been full of speculation that the government will backtrack on its plans to crack down on non-domiciled tax status for ultra-wealthy foreigners. The need for revenues makes it important not to drive non-doms out of the country, one City lawyer told the FT. ‘We need a friendly regime.’ There will be plenty more where that came from.

None of this is what working-class voters had in mind when they opted for Leave. If it’s combined with the policy every business interest in the UK wants – the Norwegian option, in which we contribute to the EU and accept free movement of labour, i.e. immigration, as part of the price – it will be a profound betrayal of much of the Leave vote. If we do anything else, we will be inflicting severe economic damage on ourselves, and following a policy which most of the electorate (48 per cent Remain, plus economically liberal Leavers) think is wrong. So the likeliest outcome, I’d have thought, is a betrayal of the white working class. They should be used to it by now.